Caveolin-1 (cav-1) is an important player in cell signaling and endocytosis that has been shown to colocalize with cholesterol-rich membrane domains. Experimental studies with varying cav-1 constructs have suggested that it can induce both cholesterol clustering and membrane curvature. Here, we probe the molecular origin of membrane curvature and cholesterol clustering by cav-1 by using coarse-grain molecular dynamics simulations. We have performed a series of simulations of a functionally important cav-1 construct, comprising the membrane-interacting domains and a C-terminal palmitoyl tail. Our results suggest that cav-1 is able to induce cholesterol clustering in the membrane leaflet to which it is bound as well as the opposing leaflet. A positive membrane curvature is observed upon cav-1 binding in cholesterol-containing bilayers. Interestingly, we observe an interplay between cholesterol clustering and membrane curvature such that cav-1 is able to induce higher membrane curvature in cholesterol-rich membranes. The role of the cav-1 palmitoyl tail is less clear and appears to increase the membrane contacts. Further, we address the importance of the secondary structure of cav-1 domains and show that it could play an important role in membrane curvature and cholesterol clustering. Our work is an important step toward a molecular picture of caveolae and vesicular endocytosis.